Roku ROKU and Disney DIS are two major players betting on the future of ad-supported streaming, but they’re taking very different paths. Roku is focused on a platform-first strategy built around connected TV (CTV) ads and an easy-to-use interface, while Disney is using its strong content library, streaming bundles and the upcoming ESPN direct-to-consumer launch to create a full ad-supported streaming experience.
As ad-supported streaming grows in popularity, driven by changing viewer habits and tighter consumer budgets, the big question for investors is: Which company is in a better position to deliver growth for investors? Let’s delve deeper.
The Case for ROKU Stock
Roku has been strengthening its position in the U.S. ad-supported streaming market by focusing on platform innovation. The Roku Channel became the #2 app on its platform by engagement in the United States in the first quarter of 2025, driven by improvements to the AI-powered content row that has been boosting viewer engagement, ad reach and subscriptions.
In the first quarter, platform revenues rose 17% year over year to $881 million, with platform gross margin maintained at 52.7%. Streaming hours on The Roku Channel were up 84% year over year, and more than a third of U.S. streaming households engaged monthly with the content row. Roku Ads Manager has been helping small businesses to launch performance-driven campaigns.
The Home Screen has been reaching more than 125 million people daily, serving as a key launch point for advertisers. Roku’s ad partnerships and shoppable formats have been unlocking new monetization avenues. A recent deal with Amazon Ads expanded reach to an estimated 80 million CTV homes. Roku has been investing in new ad products and measurement tools, expected to roll out in the second half of 2025.
However, advertiser demand has been shifting toward non-guaranteed programmatic campaigns, which has been putting modest pressure on platform margins despite continued growth. This trend is expected to persist in the near term, as marketers prioritize flexibility and performance-driven outcomes amid an uncertain macro environment.
The Case for DIS Stock
Disney has been accelerating its position in the ad-supported streaming market by combining its content with a unified user experience. The integration of Hulu and sports content into Disney+ has been increasing engagement and significantly reducing churn. This broader content offering has been positioning Disney+ as a differentiated platform that appeals to a wider audience across genres and age groups.
In the second quarter of fiscal 2025, Disney’s streaming business delivered strong performance, contributing to a 20% year-over-year increase in adjusted earnings. ESPN’s primetime viewership among the 18-49 demographic was up 32% year over year, its best fiscal second quarter ever. With the announcement of plans to launch ESPN’s direct-to-consumer standalone service, Disney has been preparing a fully bundled, integrated experience that will combine live sports, entertainment and general content under one ad-supported umbrella.
Disney has also been investing in ad-tech and personalization, with improvements expected to roll out over the coming months. Initiatives such as paid sharing and customized ad experiences have been helping improve both user engagement and advertising ROI. The company confirmed that major platform improvements are on track for near-term delivery.
With growing ad demand, improved churn and platform unification, Disney’s streaming segment is expected to become a key profit driver in the years ahead.
Valuation and Price Performance of ROKU and DIS
Valuation-wise, DIS shares are trading cheap while ROKU shares are overvalued, as suggested by a Value Score of B and D, respectively.
In terms of forward 12-month Price/Sales, DIS shares are trading at 2.23X, below ROKU’s 2.62X.
Price/Sales (F12M)
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In the year-to-date period, ROKU shares have gained 19.5%, while DIS shares have appreciated 11%.
ROKU and DIS Stock Performance
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How Do Earnings Estimates Compare for ROKU & DIS?
The Zacks Consensus Estimate for ROKU’s second-quarter 2025 loss is pegged at 17 cents per share, which has remained steady over the past 30 days, indicating a 29.17% increase year over year.
Roku, Inc. Price and Consensus
Roku, Inc. Price and Consensus Roku, Inc. price-consensus-chart | Roku, Inc. Quote
The Zacks Consensus Estimate for DIS’ second-quarter 2025 earnings is pegged at $1.47 per share, which has been revised upward by 2 cents over the past 30 days, indicating a 5.76% increase year over year.
The Walt Disney Company Price and Consensus
The Walt Disney Company Price and Consensus The Walt Disney Company price-consensus-chart | The Walt Disney Company Quote
Conclusion
Roku has been delivering strong platform growth and expanding its ad-tech capabilities, but near-term challenges persist. Its reliance on programmatic ads adds execution risk, and platform margins remain under modest pressure. While innovation continues, much of the upside appears priced in, with limited movement in earnings estimates.
Disney, meanwhile, is building a more integrated streaming ecosystem with unmatched content and global reach. With ESPN bundling, rising engagement and improving estimates, DIS stands out as the better long-term investment in ad-supported streaming.
DIS, with a Zacks Rank #2 (Buy), currently offers a better investment opportunity than ROKU, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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